Long-term financing down, but not out

Published 7:08 pm, Friday, March 22, 2013

But don't expect the finance board members' debate to be the final word on the issue. It is a common, often sensible -- and ultimately the fairest -- way to fund capital projects. Furthermore, Greenwich's capital costs are going to continue to grow over the coming years, though we don't know how quickly and by how much. That's because we can't yet know the full implications of the ground remediation needed at Greenwich High School.

If those costs are more than town officials hope, they could be forced to elongate terms of borrowing, or return to mistakes of the past and skimp on infrastructure needs.

BET Republicans Thursday night defeated a Democratic proposal to finance over 20 years the project to build a new central fire station. The move would have been a radical departure for Greenwich. It was only five years ago that the town agreed to any borrowing at all -- and that was strictly short-term: Five-year bonds preceded by two-year bond anticipation notes, on which the town pays only interest.

Before that, the town cleaved to the Yankee tradition of pay-as-you-go and took great pride in not carrying any debt. The problem was, while everyone enjoyed not having debt payments driving up their taxes, the town infrastructure around them crumbled.

That's not to say the conservative approach to borrowing has not had its benefits. Of course it has. One of the great attractions of Greenwich is its low tax rate relative to surrounding communities. The town's credit rating is stellar. And it is on more stable financial footing than many, if not most other places, in part because it is not drowning in debt (although some believe it already is, the self-imposed $210 million debt limit is not far off).

In other places, where the debt load is much higher, the discovery of soil contamination at the high school would have been a much bigger problem -- although it remains plenty big in Greenwich; more on that in a moment.

It is admirable for budgeters who oppose long-term bonding to not want to "pass down to my children a debt level that doesn't make sense because this town has the ability to finance projects in the five-year model," as BET Budget Committee Chairman Joseph Pellegrino put it the other night.

But we think the stronger argument was voiced by board member Mary Lee Kiernan, who proposed the long-term fire house plan: If the building is to serve the town for many, many years, isn't it only fair to spread the burden of paying for it out a bit? The answer would be yes under any circumstances, but especially when a new fire house is caught in a logjam with other capital needs and projects, as is currently the case. The current generation of taxpayers is being asked to pay for a high concentration of projects that will benefit the town for decades.

Which brings us back to the contaminated fields at the high school. We don't know how much the problem will add to the jam, but add to it it will. A consultant working on the contamination has outlined a menu of remediation plans that could cost anywhere from $12 million to $180 million. It's quite the range.

The consultant is leaning toward a plan it says could cost between $13 million and $20 million. But who knows how much that or any plan will actually cost when all is said and done? And who knows what state and federal regulatory agencies will approve? If they require a more expensive option, the town is going to have to figure out how to pay for it. Perhaps federal and state funds will be available to help with costs; there's a lot we do not yet know.

So, no, the issue of long-term borrowing, currently defeated, is not gone. It will be back. It makes sense. It likely will make increasingly more sense in the coming years.